IRS Guidance on IRA Prevailing Wage and Apprenticeship Provisions
On November 30, 2022, the Internal Revenue Service (IRS) published Notice 2022-61, which offers preliminary guidance on the prevailing wage and apprenticeship (PW&A) provisions attached to certain clean energy tax incentives introduced in the Inflation Reduction Act, Pub. L. 117-169 (IRA). The IRA introduced a two-tier “base” rate and “increased” rate structure for the energy tax incentives. To qualify for the increased rate structure, the IRA requires that taxpayers, contractors, and subcontractors ensure:
- That laborers and mechanics are paid wages at rates not less than the prevailing rates.
- That a percentage of the total labor hours spent to construct the facility are performed by qualified apprentices.
Notice 2022-61 indicates that prevailing wage rates will be determined using information published by the Department of Labor (DOL) and that the required apprentices must be participating in a registered apprenticeship program. The guidance further supplies information on how to establish the beginning of construction, as well as recordkeeping and reporting requirements. The PW&A requirements generally apply to qualifying facilities where construction begins 60 days or more after the publication of IRS guidance (60-day rule). Importantly, Notice 2022-61 indicates that by its publication IRS has begun the clock on the 60-day rule. Therefore, pursuant to the notice, the PW&A requirements will come into effect for facilities that begin construction on or after January 29, 2023.